What is retail media advertising?

The Short Version

Retail media advertising lets brands buy ad placements directly from retailers like Amazon, Walmart, Target, and Instacart. Instead of paying Google or Meta to reach potential customers, you're paying the retailer to show your ads to shoppers who are already in buying mode—searching for products, comparing prices, or checking out.

The retailer benefits from new revenue. You benefit from first-party data, high intent audiences, and measurable ROI tied directly to sales.

Why Retail Media Exploded

Three forces created this market:

• First-party data advantage: Retailers know what customers actually bought, not just what they clicked. This is gold in a post-cookie world.
• High purchase intent: Someone searching for "wireless headphones" on Amazon is closer to buying than someone scrolling Instagram.
• Direct attribution: You can see ads → clicks → purchases in one ecosystem, making ROI crystal clear.

Retailers discovered they were sitting on a goldmine: millions of daily shoppers + transaction data + ad inventory. Amazon launched its advertising business in 2009 and now generates $10+ billion annually from ads alone.

Where Retail Media Ads Appear

On Retailer Websites & Apps

• Search ads: Sponsored product listings when customers search
• Display ads: Banner ads on category pages and product detail pages
• Checkout ads: Ads shown during the final purchase steps

In Physical Stores

• Digital shelf tags
• Checkout lane displays
• In-aisle screens
• Receipt-based offers

On Retailer Marketplaces

• Amazon Advertising (Sponsored Products, Sponsored Brands, Display Ads)
• Walmart Connect (search, display, email)
• Target Roundel (search, display, email, in-store)
• Instacart Ads

How It Works: The Advertiser's Perspective

1. Set up an account with the retailer's ad platform (Amazon Advertising, Walmart Connect, etc.)
2. Choose your audience using retailer data: past purchasers, category browsers, competitors' customers
3. Create ads (product listings, banners, video) and set bids
4. Pay per click or impression depending on the format
5. Track conversions directly in the retailer's dashboard
6. Optimize based on ROAS (return on ad spend)

Key Differences from Traditional Digital Ads

| Aspect | Retail Media | Google/Meta Ads |

|--------|--------------|------------------|

| Audience | Shoppers actively buying | Broad interest-based targeting |

| Intent | Purchase-ready | Awareness to consideration |

| Data | Transaction history | Behavioral/demographic |

| Attribution | Direct (same platform) | Cross-device, multi-touch |

| Cost | Often higher CPC, better ROAS | Lower CPC, variable ROAS |

The Strategic Value for CMOs

Revenue Growth

Retail media is a high-ROI channel. Brands report 3:1 to 5:1 ROAS because you're reaching people ready to buy.

Competitive Advantage

If your competitor isn't advertising on Walmart or Target, you own that shelf space digitally. Early movers in retail media gained significant market share.

Data & Insights

Retailers share anonymized insights: which products customers searched for, which ads drove conversions, which demographics bought. This feeds back into product development and broader marketing strategy.

Omnichannel Integration

Retail media works alongside in-store promotions, email, and loyalty programs. A customer sees your ad on Walmart.com, then sees a coupon in their email, then buys in-store—all trackable.

Budget Allocation: What CMOs Should Know

Typical spend breakdown for brands:

• Amazon Advertising: 40-50% (largest audience, most mature platform)
• Walmart Connect: 20-30% (second-largest retailer, growing fast)
• Other retailers (Target, Instacart, Best Buy): 20-30%

Budget sizing: Start with 5-10% of your digital ad budget and scale based on ROAS. Many brands now allocate 15-25% of total digital spend to retail media.

Common Challenges

• Fragmentation: Each retailer has different tools, data access, and reporting. You need separate strategies for Amazon vs. Walmart vs. Target.
• Bid inflation: As more brands discover retail media, CPCs are rising. Early-mover advantage is fading.
• Limited audience reach: You only reach people shopping at that specific retailer.
• Data silos: Retailers don't share customer data across platforms, limiting cross-retailer insights.

Tools & Platforms

Direct retailer platforms:

• Amazon Advertising
• Walmart Connect
• Target Roundel
• Instacart Ads
• Best Buy Ads

Management platforms (manage multiple retailers in one place):

• Skai
• Kenshoo
• Marin Software
• Pacvue

Bottom Line

Retail media advertising is the fastest-growing ad channel because it combines high-intent audiences with transparent ROI. For CMOs, it's no longer optional—it's a core pillar of digital strategy. Start by auditing where your customers shop, allocate 10-15% of digital budget to test, and build dedicated teams or partner with agencies that specialize in retail media management. The retailers with the largest customer bases (Amazon, Walmart, Target) should be your priority, but don't ignore vertical players like Instacart if your products fit.